Election Chaos

The probability of a stalemate on November 2 is mounting by the day.

Right now, Bush has an estimated 213 electoral votes that are solidly in his camp or leaning in his direction, while Kerry has 190 – a difference of a meager 23 electoral votes.

Meanwhile, 68 electoral votes are up for grabs in Florida, Ohio, and Pennsylvania – three battleground states where there could be messy legal battles, confusing recounts, and Florida-2000-style disasters.

Already, tens of thousands of lawyers are fanning out across the country, ready to mount challenges that could stall, block, and paralyze final decisions for weeks, even months.

On November 2, there will be mass confusion regarding provisional ballots, absentee ballots, and ballots from millions of newly registered voters. There will be millions of votes with no paper trail that can never be recounted. There will be millions of citizens ready to mount some of the greatest voter protests of all time.

And there will be chaos.

So if you’re mad or frustrated, I don’t blame you.

This election chaos threatens to bring on the worst political uncertainty since the Civil War … destabilize world markets … trigger mass selling in the stock market by U.S. and foreign investors … drive the dollar into an uncontrollable tailspin … catapult gold into the stratosphere … and shake Wall Street to the core.

Skeptical? Consider the looming dangers …

Looming Danger #1: Provisional ballots. In theory, these were intended to give citizens a chance to vote even if they would normally have been disqualified and turned away from the polls. In practice, they are creating mass confusion and are already setting off a string of lawsuits in battleground states.

How big is the problem? After the 2000 election, the Census Bureau found that nearly 3 million people didn’t vote because of erroneous purges of registration lists, recent moves by voters, clerical mistakes, and database problems.

So provisional voting, designed to address these kinds of issues, could affect millions of votes.

But in 28 states, including Florida and Ohio, the latest court decisions indicate that provisional ballots will not be counted if they are cast by a voter in the wrong precinct. Meanwhile, in 17 other states, they will be counted.

And either way, the interpretation of the law is being challenged:

* In five states – Colorado, Florida, Michigan, Missouri, and Ohio – voting advocates have gone to court to guarantee that all provisional ballots are counted.

* In Florida, however, the state Supreme Court has upheld the state’s right to reject provisional ballots cast in the wrong precinct.

* Meanwhile, a federal judge has ruled that Ohio’s practice of not counting provisional ballots cast in the wrong precinct violates federal law.

Alas, here we are, a week and a day away from the election, and still this critical issue is largely unresolved, with legal landmines exploding in multiple states.

Looming Danger #2: New voting machines. After the intense embarrassment of the Florida election fiasco in 2000, election officials in the state were so determined to avoid a repeat, they outlawed the old punch-card ballots and installed new voting machines throughout the state.

Other states followed suit.

The first test came in the 2002 Florida Democratic primary for governor. Poll workers in Miami and Ft. Lauderdale shut some voting sites for five hours to start the machines and failed to retrieve hundreds of votes. It took a week to get the results.

Now, eight days from today, similar episodes are bound to occur across the U.S. when voters go to the polls.

Machines have already broken down during tests in Palm Beach County, Florida.

In Georgia and other states, touch-screen voting equipment has been installed, but it lacks printers to produce a paper trail in case a recount is needed.

Meanwhile, back in Ohio, 72 percent of voters will still use antiquated punch cards.

Looming Danger #3: A massive legal bottleneck at the polling places. Lawyers for the Democrats will be pushing aggressively to let everyone vote, even if they are not clearly qualified.

Their Republican counterparts, meanwhile, will be equally aggressive in their attempts to challenge anyone who appears to be unqualified – because they look too young or appear not be a citizen, for example.

As a result, expect frequent stoppages in the voting, long delays – even shouting and shoving.

Looming Danger #4: Understaffed polls. According to the U.S. Election Assistance Commission, the current crop of poll workers falls short by several hundred thousand, precisely when election officials are expecting to be swamped with record voter turnout.

Most poll workers are elderly, with an average age of 72, and many are being scared away by the prospect of angry lawyers arguing and screaming at them.

With inadequate staffing, massive polling errors are inevitable.

How Did We Get Into This Mess?

Back in 2000, I personally witnessed the mess at the court house in downtown West Palm Beach. I saw the chaos first hand.

But when I went home that evening, I assumed that, with four long years to go, the problem would be largely resolved before the next presidential election.

I assumed wrong. Although election officials around the country did TRY to fix the mess, they actually wound up making it worse, much worse.

Former presidents Jimmy Carter and Gerald Ford were appointed to lead a bipartisan commission to propose reforms, and in response, Congress passed the Help America Vote Act of 2002 (HAVA).

Problem: Due to lack of funding and the diversity of state election laws, HAVA was only partially implemented, leaving a hodgepodge of old and new laws and technologies that are now creating havoc.

Carter’s current opinion: The problems are so severe the U.S. doesn’t even qualify for international election monitoring. In other words, our problems are worse than those of a third-world country.

Even the low-tech voting in Afghanistan this month – where tens of thousands of voters cast their ballot multiple times – appears to have been more efficient.

The Brazil Solution

Sunday morning, a relative from Brazil, who is very active in their voting process, was visiting for the weekend.

She and I sat out on my back porch for about an hour, and we looked out at the lake behind my home. Florida white ibises came ashore and dipped their beaks into the grass for breakfast.

“For Brazil’s national election,” she recounted, “we installed hundreds of thousands of easy-to-use, tamper-proof voting machines in every precinct of the country, including remote indigenous villages.

“You punched in a number corresponding to the candidate of your choice. The picture and name of the candidate popped up on the screen. Then you could either reject or confirm. When you were done voting, the machine printed out a receipt, just like a cash register. That gave us a paper trail for voter recounts or challenges.”

I asked her about the risk of election fraud and errors. She admitted the system was not perfect, but she hastened to add that international monitors found virtually none.

Representatives of each party were present at all polls. Poll workers were immediately available to help voters or resolve any issues. And the system was designed to be fair even to the relatively large number of Brazilian citizens who are semi- or completely illiterate.

“Three hours after the polls closed,” she said with pride, “we had results. Even in the state of Acre in the Western Amazon, where it used to take weeks to tally the votes, we got final results within a few hours. It was the largest, fairest, and most efficient election in the history of the third world, perhaps even in the entire world,” she asserted.

She paused as an ibis wandered over to a makeshift fence around the pool, where our screen porch, the victim of Hurricane Jeanne, once stood.

“Why can’t you do the same here in the U.S?” she asked. “Not only will the election be fairer, but more importantly, your next president would be able to claim his rightful legitimacy and govern with authority … even without another 9/11.

I didn’t have an immediate answer. I told her that on November 2, about 50 million people WILL use electronic voting machines. But the diversity of technologies is mind-boggling, and some of the machines are subject to manipulation or tampering – so much so that they have been banned in some jurisdictions. I also explained that another 55 million voters will still use old- fashioned punch cards, levers, or ballots.

She shook her head. She found it hard to believe that the world’s most advanced country still had one of the most confusing – and politically dangerous – election systems in the world.

“Only A Miracle Can Prevent … Post-Election Chaos”

John Dean, former Counsel to President Richard Nixon, puts it this way:

“[W]e could see simultaneous litigation in a number of states – chosen either because the polling was especially close, or because there are significant numbers of vulnerable votes to try to disqualify.

“When I discussed this situation with several attorneys on both sides, I realized none are likely to back down. The Democrats intend to play hardball to win this time; the Republicans feel that Democrats aren’t adhering to the letter of the law in registration efforts – and want to hold them to it.

“It is impossible to get a complete count, but it appears that at least 10,000 – and possibly as many as 150,000 – attorneys, paralegals and law students will be working as observers, or handling election problems, on November 2 – just in the swing states …

“It may be days or weeks, if not months, before we know the final results of this presidential election …

“The cost of such litigation will be great – with the capital of citizens’ trust in their government, and its election processes, sinking along with the nation’s (if not the world’s) financial markets, which loathe uncertainty …

“Only a miracle … can prevent this election from descending into post-election chaos. But given the alternatives, a miracle is what I am hoping for.”

Dow Headed Down!

Until last late last week, the financial markets were largely oblivious to the looming political crisis. But on Friday, they began to smell the danger and respond accordingly.

The Dow plunged to new lows for the year. Oil hit another new all-time high. Gold surged by $5. And the dollar got whacked.

This morning, we’re seeing more of the same: Asian markets have tanked, with both the Japanese Nikkei and Hong Kong’s Hang Seng Index down 197 points.

Gold is up another $5.70 at $431 per ounce, while oil hit a new high of $55.67 early this morning, before receding a bit. And again, the dollar is getting creamed.

What’s in store for the stock market?

I have a very simple answer: Get ready for a further decline in the Dow. The mounting uncertainty going into the election, and the likely paralysis that will ensue in its wake, are bound to drive stocks downward.

Some stocks will buck the trend. But most will not.

Urgent Steps

Step 1. Get your money to safety. Or at the very least, greatly reduce the risk in your investment portfolio.

The safest place for your money right now: Treasury bills or money market funds that invest exclusively in short-term Treasury bills and equivalent. Examples:

* American Century Capital Preservation Fund (CPFXX)

* Dreyfus 100% U.S. Treasury Fund (DUSXX)

* Fidelity Spartan U.S. Treasury Money Market Fund (FDLXX)

* USGI U.S. Treasury Securities Cash Fund (USTXX)

* Vanguard Treasury Money Market Fund (VMPXX)

Step 2. Decide how much you are willing to risk and allocate some of that money to hedges against this crisis. Examples recommended in my Safe Money Report …

* Gold mining shares with low costs, abundant reserves, plenty of cash, and little or no debt

* Oil and energy royalty trusts that distribute nearly all of their earnings to shareholders, giving you high dividend yields of 10% or more … PLUS a good opportunity for capital appreciation.

* Mutual funds that are capitalizing on the decline in the dollar and/or the boom in natural resources.

* Mutual funds designed to rise in value when the stock market declines.

Step 3. Do everything in your power to make sure YOUR vote counts. Do not let long lines or confusion at the polls discourage you.

Then, when it’s all over, join me and my new non-profit, non-partisan Sound Dollar Committee to help make sure our country has the resources it needs to make sure this never happens again. More details to come.

Good luck and God bless!

Martin D. Weiss, Ph.D.
Editor, Safe Money Report
Chairman, Weiss Ratings, Inc.
martinonmonday@weissinc.com

Martin Weiss and “Martin on Monday” are non-partisan. Third-party ads do not necessarily represent their opinion and should not be interpreted as an endorsement.

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